Nsic vs Nova Vision Electronics Pvt. Ltd.
2009 Latest Caselaw 1231 Del

*          HIGH COURT OF DELHI : NEW DELHI

+    I.A. No.10112/2006 & IA No.10113/2006 in CS(OS) 748/2002

%                                  Reserved on :           16th March, 2009

                                   Decided on:             8th April, 2009

NSIC                                                .....Plaintiff
                       Through : Mr. Sanat Kumar, Adv.

           Versus

NOVA VISION ELECTRONICS P. LTD.                            ......Defendants
                Through Mr. K.K. Jha, Adv.

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                     Yes

2. To be referred to Reporter or not?                                  Yes

3. Whether the judgment should be reported
   in the Digest?                                                      Yes

MANMOHAN SINGH, J.

1. The present suit filed by the plaintiff under Order XXXVII,

Code of Civil Procedure had been decreed on merits and an ex parte

decree for a sum of Rs.26,88,133.78 with interest @ 16% p.a. from the

date of institution of the suit i.e. 16 th March, 2002 till realization of the

amount has been passed in favour of the plaintiff and against the

defendants. The pending applications including application for leave to

defend the suit were also disposed of by order dated 28 th July, 2006.

2. On 28th August, 2008 an application was filed on behalf of

defendants 1 to 3 under Order XXXVII Rule 4 read with Section 151

CPC being I.A.No.10113/06 for setting aside the ex parte decree dated

28th July, 2006 along with an application for stay of the operation of the

ex parte decree in which this court has heard arguments of the parties

and reserved the order on 16th March, 2009.

3. The main ground which has been taken in this application is

that this matter was listed on 21 st April, 2006 and 3rd July, 2006 but no

one appeared on behalf of the defendants and the matter was adjourned

to 6th July, 2006. Even on that date, no one appeared on behalf of the

defendants. The matter was heard ex parte and the court reserved the

order on that date.

4. It is contended by the defendants that the defendant No.2

reached the office of his counsel on 13 th July, 2006 in connection with

the matter titled as NSIC vs. Morgen Electronic Pvt. Ltd as the said

matter was listed for evidence before the learned Joint Registrar of this

court on 15th July, 2006. The defendant No.2 asked his counsel about

the progress of this matter and the counsel checked up the same from his

court clerk as well as the court diary in which it was mentioned that the

matter was adjourned to 21st April, 2006 at the front page of the file but

the clerk of the counsel had not written this matter in the relevant page

of the court diary.

5. Learned counsel for the defendants under the said

circumstances asked his colleague, namely, Mr. K.K. Jha, Advocate to

inspect the file of this case and to know the status of the proceedings

taken place on 21st April, 2006.

6. It is further stated that Mr. Jha, Advocate enquired from the

dealing clerk on 14th July, 2006 as to the next date in the matter and he

was informed that the file has not been received from the court from 3 rd

July, 2006. Then Mr. Jha tried to inspect the court file and moved an

application for inspection of the court file on 19 th July, 2006 for 20th

July, 2006 but the file was not sent by the concerned dealing clerk and

the application was returned with the remark that the file has not been

received from the court. Another application was moved on 24th July,

2006.

7. The counsel thereafter asked his clerk to check up the

position with the Court Master and the Court Master informed Mr. Jha,

Advocate that the court file is lying with the court from 3 rd July, 2006.

It was also informed by the Court Master that dictation has already been

given to the Private Secretary by the court and the judgment would be

pronounced within 3 to 4 days.

8. The learned counsel for the defendants was informed by Mr.

Jha, Advocate accordingly and the main counsel had waited for

pronouncement of the said judgment. The judgment was pronounced in

the matter on 28th July, 2006.

9. It is mentioned in the application that Mr. Jha, Advocate tried

to inspect the file by moving another application for inspection on 2nd

August, 2006 for 3rd August, 2006 but the said application was returned

on the ground that the file has been sent to the decree writer.

10. Then further applications were moved on 8 th August, 2006,

17th August, 2006 and 18th August, 2006 for inspection of the file and

ultimately the counsel pursued the application and contacted the decree

writer in this regard and ultimately the file was inspected only on 22 nd

August, 2006 by counsel for the defendants and it transpired from the

file that the court has decreed the suit after granting opportunity from

time to time for non appearance of the counsel for the defendants.

11. It is stated in the application that the non appearance for the

defendants and their counsel on 21 st April, 2006, 3rd July, 2006 and 6th

July, 2006 is a result of their ignorance about these dates and it is a

bonafide mistake on the part of the clerk of the counsel for the

defendants who could not note down the date on which the matter was

listed on 21st April, 2006.

12. It is contended by the counsel for the defendants that the

defendants have a very good case on merit and they are entitled for

unconditional leave to defend as the plaintiff has filed the present suit

on the basis of forged and fabricated documents and the same can be

proved by the defendants only when the defendants will be granted an

opportunity to lead evidence and cross examination of the plaintiff's

witnesses.

13. In the reply to the application, the plaintiff has opposed the

prayer of the defendants made in the application on the ground that the

application filed by the defendants to set aside the decree does not

disclose any special circumstances as envisaged in Rule 4 of Order

XXXVII of the Code of Civil Procedure, the principles of which are

different than those contained in Order IX Rule 13 CPC in which the

applicant can succeed by showing sufficient cause for non appearance of

the defendants but in the present case, the defendants have to show the

existence of special circumstances. Since the defendants have failed to

show the existence of special circumstances the present application

cannot be entertained.

14. It is further contended by Mr. Sanat Kumar, Adv. appearing

on behalf of the plaintiff that not only the defendants are required to

show the special circumstances in the application for setting aside the

decree, but the defendants under the law are also required to disclose the

substantial defense available to him to defend the suit as the judgment

and decree passed by this court is on merit in which all the grounds

raised by the defendants seeking leave to defend have been considered

and decided, therefore, the present application is not maintainable for

lack of showing special circumstances.

15. I have heard learned counsel for the parties and I agree with

the submission of learned counsel for the plaintiff that in order to

succeed in the present applications, the defendants have to show the

existence of special circumstances and only then the present application

can be considered.

16. The question under these circumstances in the present case is

as to whether the defendants have been able to show the special

circumstances to set aside the ex parte decree passed by this Court,

where while passing the ex parte decree, the court has considered the

grounds raised by the defendants in the application for leave to defend

the suit.

17. It appears from the application for leave to defend filed by

the defendants, that the following grounds, inter alia, were stated in the

application, the same are also referred in the judgment :-

(i) the claim of the plaintiff was not within the ambit of the provisions of Order XXXVII CPC.

(ii) that it was not within limitation as alleged guarantee was executed on 7th November, 1986 while the present suit was filed in or about March, 2003.

(iii) that the plaintiff Corporation was in any case free to sell the goods for recovery of its alleged dues.

(iv) it was contended that neither the goods were disposed of by the plaintiff nor the same were delivered to the plaintiff company and instead a false and frivolous claim has been made.

18. Similar grounds are mentioned in the present application that

the suit was not filed within limitation as the alleged guarantee was

executed on 7th November, 1986 while the present suit was filed in or

about March, 2003. Learned counsel has also referred to Paras 9 and 10

of the plaint. The same reads as under:-

"9. It is pertinent to mention here that since the defendant No.1 had not been paying the amounts due and outstanding in its account the plaintiff had freezed the said account of defendant No.1 with effect from 1st April 1992.

10. Even though the defendant No.1 made some payments of the defendants but despite of the substantial amount remaining due and outstanding in its account the defendant No.1 vide its letter dated 1st July 1992 acknowledged and accepted its liability towards plaintiff to the tune of Rs.26,88,133.78. The defendant No.1 made several promises to pay the dues but did not make any payment."

19. Learned counsel for the defendant has argued that in view of

Para 9 of the plaint, the plaintiff was aware that the defendant No.1 had

not been paying the amount due and outstanding, therefore, the accounts

of the defendants were freezed with effect from 1st April 1992. After the

gap of six years, the defendants admittedly accepted the liability by

sending the letter dated 1st July, 1998 to the plaintiff. Subsequently by

virtue of agreement dated 25th June, 1999 the defendant No.1 again

acknowledged and accepted the liability to the tune of Rs.26,88,133.78.

Between this period the claim of the plaintiff becomes barred by

limitation and it does not matter if the defendants have accepted the

liability of lapsed claim later on. If any acknowledgement is made by

the party after the expiry of period, the said acknowledgement has no

meaning in the eyes of law and cannot be used as admitted liability

against the party. It is further argued that defendants 2 and 3 are not

signatory to the said agreement dated 25th June, 1999, therefore, the said

acknowledgement is also without any substance.

20. Learned counsel for the defendants has not disputed the fact

that in the ex-parte decree passed on 25th July, 2008 the learned Court

in para 18 of the judgment has dealt with the question of delay but the

learned counsel for the defendants has submitted that the point of

limitation has not been dealt as per submission mentioned in para 20 of

this order.

21. He further submits that the acknowledgement in the year

1998 and 1999 is contrary to Section 18 of the Limitation Act as

according to the defendants there is no acknowledgment or any

document in this regard by the defendants between the period 1992 to

30th June, 1998. He contends that the suit could be maintained only if

there was an acknowledgement under Section 18 of the Act. He submits

that this aspect has not been considered in the judgment passed by the

Court in favour of the plaintiff. Therefore, accordingly to him the point

of limitation is in favour of the defendants and on this ground itself the

defendants are entitled for leave to defend the suit unconditionally.

22. As regards the application seeking setting aside an ex-parte

decree, the learned counsel for the defendants has referred the decisions

State Bank of Saurashtra vs. Ashit Shipping Services Pvt. Ltd., AIR

2002 SC 1993 and Goyal M.G.Gases vs. Premier International

Finance Ltd, 138(2007) DLT 259.

23. After hearing the parties, I am of the opinion that prima facie

there is some force in the submission of defendants on the question of

limitation which has specifically raised by the defendants but has not

been dealt in the judgment, therefore, I am inclined to grant one

opportunity to the defendant to make the submission before this Court

on merit. I feel that the application made by the defendants comes

within the meaning of special circumstances and is thus maintainable.

24. However, since the other issues involved in the matter have

been dealt and decided, therefore, the defendant should not address the

same issues again except the issue of limitation discussed above. In

case the issue of limitation is decided in favour of the defendants, then

this Court will decide the application for setting aside the ex-parte

decree accordingly. The operation of judgment and decree dated 28 th

July, 2008 is stayed as prayed in the IA No.10112/2006, and is disposed

of accordingly.

CS (OS) No.748/2002 & IA No.10113/2006

25. List on 13th July, 2009 for further hearing.

MANMOHAN SINGH, J APRIL 08, 2009 SD